“They’re going to eat the cow.”
That was the gist of the reaction I received from virtually every economist I talked to when I told them about an innovative programme designed to eradicate extreme poverty. That was 2007 and the program was, of course, the Ultra-Poor Graduation (UPG) program, known at the time as Targeting the Ultra-Poor (TUP).
I could follow the logic that warranted this reaction—any asset given to these poor and marginalized people, who are constantly struggling with the most basic necessities of life, had to be used for the most basic necessity: food. Counter to that was Sir Abed’s logic of hope, and the conviction that the poor, like everybody else, want to improve their lot and that of their children. What I also knew was that BRAC would not take an ambitious program like that to the field without a solid understanding of the realities of these people. What I did not know was how this graduation program, unique in its approach, was going to work.
So, when I came to Dhaka in 2006 in preparation for the UPG program evaluation, it was also an opportunity to educate myself about the workings of the program. I stayed in Dhaka for a week, and the things I learned during my short stay have remained with me ever since.
I remember working with BRAC’s Research and Evaluation Division (RED) team, all of us gathered together in a room for long hours, trying to prepare a baseline questionnaire. I think—in fact, I am sure of it—that to an outsider, we were working like people possessed. But to us, it was a frenzy of knowledge, of ideas, of insights. For instance, at one point, one of the RED members pointed out that the target population was not unemployed. In these villages, nobody was; everybody did something. That did not mean they were doing what they were best at, or what made them happier. They did what they could because they had to. This forced us to think deeply about the nature of their labour. I immediately realized that this was the kind of insight that one could not gain from designing questionnaires from the comfort of one’s office. My fear that we, Northern researchers, risk misinterpreting data by seeing it through the lens of a Northern economy became a certainty and shaped my collaboration with BRAC ever since. They do nothing without first developing an acute sense of the lived realities of the intended beneficiaries. I believe this approach, this philosophy that defined BRAC since its inception was a sine qua non for the UPG program’s success.
However, not everybody shared the idea of success. After two years of its implementation, when the UPG program did not increase beneficiaries’ consumption, at least not as much as one would hope, many called the program a failure. But what the critics failed to notice was that the program did not increase people’s consumption by a large margin because, as we soon found out in our evaluation, it was increasing their savings and investment. Thanks to the program, people were buying more cows, goats, and other rearing assets, which would reproduce and multiply, increasing their productive asset base. Some were also buying land, which, prior to the program, they could only dream of doing.
That is what the program did—it made the ultra-poor realize their dreams; it ignited hope; it fuelled aspirations, aspirations of a better tomorrow. I bemoan the fact that I never had the good fortune of visiting these people in person. Nevertheless, I could see, vividly too, their incredible life journey, the potential they harboured to escape the vicious, unforgiving cycle of poverty in the figures that came up in our evaluation reports—increase in annual earnings, increase in savings, increase in hours devoted to more stable, productive work. BRAC had given them a rare chance to turn their lives around, and it was evident that they were not going to throw it away by eating a bit more for a short while.
Since it was first introduced in 2002, the UPG program has been proving its critics wrong, both in Bangladesh and abroad, and has shown that poverty traps exist and that they can be broken. In the process, it has evolved a lot too. In 2007, for instance, the program started offering selected beneficiaries credit along with the grants it previously provided. Due to their existing heterogeneity, these selected credit-plus-grant beneficiaries were further divided into groups in 2017. These changes reflect BRAC’s willingness to learn; they echo how deeply the organization is in tune with the people’s everyday lives.
As the program caters for a more diverse set of ultra-poor and relies more on loans, instead of grants, partly due to the changing nature of poverty and partly for scalability, two things will be crucial.
First, the transfer amount. These ultra-poor people, by definition, are very far from the poverty threshold. As such, they require a large enough transfer to reach that threshold; anything below is only useful for consumption. Unfortunately, this is one area a significant number of anti-poverty programs get wrong, for instance, microfinance loans are a fraction of the size of the loans the UPG program offers—you cannot put out a wildfire with a bucket of water.
The other essential element is the loan repayment period, yet another area in which too many microfinance programs come short by asking for the loans back too soon. Even when ultra-poor households are given large amounts, it takes time before it yields any results. In our estimation, it takes at least a good five years for the ultra-poor to be in a steady state. Couple large transfers with long repayment periods, and they will be able to repay the loans many times over.
The BRAC UPG program masterfully blends large transfers with a host of other services to successfully support ultra-poor people get out of poverty. It has shown that the ultra-poor can engage in productive work but lack the means to do so and that giving them those means is an investment with extremely high returns, not just for them but for society at large. I myself could not be happier to have witnessed this incredible journey.
Dr Oriana Bandiera is a Professor of Economics and a Sir Anthony Atkinson Chair in Economics, at the London School of Economics and Political Science.
“UPG & Me: 20 Years of the Graduation Approach” is an ongoing blog series from BIGD where researchers and practitioners reflect on the impact of the Ultra-Poor Graduation in framing their perspectives in their worldview. Read the first part here, the second part here, the third part here, the fourth part here, the fifth part here, and the sixth part here.
